Herbalife & Ackman: What's Next?

Bill Ackman is down 'hundreds of millions' on his Herbalife short. With George Soros betting against Ackman, you have to wonder whether he's in over his head.

NEW YORK ( TheStreet) -- The Bill Ackman saga that is his short position in nutritional products company Herbalife ( HLF) only becomes more complicated and dramatic now that George Soros, a friend of Ackman, has taken a big stake in Herbalife.

While Soros' stake in the company is unknown (the SEC only requires notification within 10 days of purchase if someone owns 5% of more of a company, otherwise the information will come out in 13F filings), it's clear that the legendary investor, famous for breaking the Bank of England in the 1980's, is betting against Ackman. In the past, Ackman has said in the past he believes Herbalife is a pyramid scheme, and the country would be better off if Herbalife went out of business.

News of the Soros investment sent the stock higher Wednesday, gaining 9.1% to close at $65.50. Shares are up 98.85% year-to-date, vastly outperforming the S&P 500 and the other major indices.

It's well known by now that Ackman is in a huge battle with Herbalife, as another activist investor, Carl Icahn, has continued buying shares in the company, saying he believes Ackman is wrong and that the multi-level marketing company is indeed a good business. Several months ago, Icahn, who has a 16.5% stake in Herbalife, and Ackman famously went on CNBCtogether, and had an epic war of words discussing not only Herbalife, but also their disdain for each other. In the past, Icahn has said a short-squeeze on Ackman would be just a kicker to Icahn making money in Hebralife. "If Ackman gets squeezed, I'm not going to feel sorry," Icahn said during the infamous CNBC interview. "The fact that I don't like Ackman, you could say, is the strawberry on top of the ice cream."

With Ackman reportedly down $300 million on his Herbalife short, according to the NY Post, Ackman is pulling out all the stops. Ackman's Pershing Square Capital Management is reportedly going to file a complaint with the SEC regarding the recent trading in Herbalife.

While the details of the complaint are not known, Ackman could be accusing investors like Soros of stock manipulation by trying to force a short squeeze. The rumor of Soros' involvement has helped the stock price to climb and could be interpreted by Ackman and other shorts as collusion.

Further complicating matters for Ackman is that Herbalife, which he contends frauds its sellers, is actually reporting strong results. Earlier this week, the Los Angeles-based Herbalife beat second-quarter expectations, earning $1.34 per share on $1.22 billion in revenue, a rise of 18% year-over-year. Analysts were expecting $1.18 per share on $1.16 billion in sales.